Council Chamber
580 Pacific St.
Monterey, California
Monterey City Council
Special Meeting Agenda
Council Special Meeting
AMENDED AGENDA
Wednesday, April 24, 2024
4:00 PM – 7:00 PM
City Council
Tyller Williamson, Mayor
Kim Barber, Councilmember,
District 1
Gino Garcia, Councilmember
Alan Haffa, Councilmember
Ed Smith, Councilmember,
District 2
City Manager
Hans Uslar
HOW TO PARTICIPATE IN THIS MEETING:
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In-Person: Please see the meeting location listed above. Wearing a mask is recommended and encouraged.
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If prompted to enter a participant ID, press #
To “raise your hand,” dial *9. Once called upon, dial *6 to unmute o Need help using or updating Zoom? Read our Zoom Meeting Instructions (PDF) This meeting will also stream live for viewing only on youtube.com/cityofmonterey (10 second delay) and on Comcast Channel 25 (up to 90-second delay).
PUBLIC COMMENT PROCEDURES AND TIME LIMITS:
The total amount of time allocated for public comment on a particular issue and for each individual speaker is generally as follows:
1. Up to three minutes per speaker.
2. For regular City Council meetings, there are two 15-minute public comment periods, one in the afternoon and one in the evening. Speakers may only comment during one session.
3. The total time allocated for public comment:
a. Items pulled from the consent agenda – 15 minutes each item b. Public Appearance items – 30 minutes each item
c. Public Hearing items – 30 minutes each item
d. Closed session items – 15 minutes each item
At the time an item is considered, the Mayor will ask those attending the meeting in person to line up at the podium or raise their hands, and for remote participants to use *9 on the telephone or the “raise hand” function in Zoom, if they wish to address the City Council. The maximum amount of time for each person to speak and the total amount of time allotted for each item will be determined based on the number of people indicating an interest in speaking and the amount of business to be conducted on the agenda. In exceptional circumstances and when necessary to ensure a full opportunity for public input, the Mayor may, with the legislative body’s consent, adjust the amount of time allowed for public input and/or the time allotted for each speaker.
CAMPAIGN CONTRIBUTION DISCLOSURE: Pursuant to the Levine Act (Govt. Code section 84308), any party to a permit, license, contract, or other entitlement before the Council is required to disclose on the record any contribution, including aggregated contributions, of more 4/24/2024 4:00:00 PM
2 than $250 made by the party or the party's agents within the preceding 12 months to any City official. Participants and agents are requested to make this disclosure as well. The disclosure must include the name of the party, participant, or agent, and any other person making the contribution; the name of the recipient, the amount of the contribution, and the date the contribution was made.
TELECONFERENCE NOTICE
A “Just Cause” teleconference attendance notification was received on April 22, 2024 from Councilmember Smith, who will make a brief statement at the beginning of the meeting regarding the general description of the circumstances requiring remote participation.
CALL TO ORDER
PLEDGE OF ALLEGIANCE
CONSENT AGENDA
All matters listed under Consent Agenda are routine and will be adopted by one motion unless a member of the City Council or the public requests discussion or a separate vote.
Ordinances
An ordinance is a law adopted by the City Council and codified in the City Code. Through the adoption of an ordinance, the City may make and enforce within its limits all local, police, sanitary, and other laws not in conflict with state or federal law. An ordinance generally becomes effective 30 days after approval at a second reading.
1. 1st Reading by Title Only of an Ordinance to Amend Chapter 30, Article 4, Sewer Service Fee, to Authorize Collection on the County of Monterey Tax Roll and Authorize a Fee Collection and Indemnification Agreement with Monterey One Water and/or the County of Monterey for this Purpose (Not a Project Under CEQA per Article 20, Section 15378 and Under General Rule Article 5, Section 15061)
***End of Consent Agenda***
STUDY SESSION
Study Session items are used to provide information to the City Council and answer their questions to clarify issues. Study Sessions provide a setting for informal discussions between staff, consultants, board, commission,committee members and the City Council regarding specific programs, projects or policies. The Council does not take formal action on the items.
2. Fiscal Year 2024-25 Budget Primer Study Session (Not a Project under CEQA Article 20, Section 15378 and under General Rule Article 5, Section 15061) ***Adjourn to Closed Session (See additional agenda)*** The City Council will take public comments on closed session items before convening to closed session.
ADJOURNMENT
Writings distributed for discussion or consideration on these matters within 72 hours prior to the meeting, pursuant to Government Code § 54957.5, are available at: monterey.org/submitted-comments and in the City Manager’s Office at 580 Pacific St., Room 1, Monterey, CA 93940 during regular business hours. 4/24/2024 4:00:00 PM
3 Information distributed to the Council at the Council meeting becomes part of the public record. Members of the public who submit written public comment on an agenda item may be subject to the Levine Act which requires disclosure of campaign contributions of more than $250 to an officer of the City within the preceding 12 months.
CITY OF MONTEREY'S 24-HOUR SUGGESTION HOTLINES:
Voicemail: (831) 646-3799 Email: [email protected] Website: http://www.monterey.org INTERPRETATION: The Monterey City Council invites and encourages public participation at its meetings. Requests for language interpretation may be made by contacting the City Clerk at [email protected] or 831-646-3935. The City Clerk will make every effort to accommodate requests for interpreter assistance. Requests should be made as soon as possible in advance of any meeting of the City Council. The City is committed to addressing language interpretation requests swiftly in order to maximize public participation.
ACCESSIBILITY: The City of Monterey is committed to including the disabled in all of its services, programs and activities. In compliance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting, please contact the City Clerk’s Office at [email protected] or (831) 646-3935. Notification 30 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting [28 CFR 35.102-35.104 ADA Title II]. Later requests will be accommodated to the extent feasible. For communication-related assistance, dial 711 to use the California Relay Service (CRS) to speak to City offices. CRS offers free text-to-speech, speech-to-speech, and Spanish-language services 24 hours a day, 7 days a week. If you require a hearing amplification device to attend a meeting, dial 711 to use CRS to talk to the City Clerk's Office at (831) 646-3935 to coordinate use of a device.
Upcoming city meetings are listed at http://isearchmonterey.org More information is available by calling (831) 646-3935 Council
Agenda Report
FROM: Nat Rojanasathira, Assistant City Manager
SUBJECT: 1st Reading by Title Only of an Ordinance to Amend Chapter 30, Article 4, Sewer Service Fee, to Authorize Collection on the County of Monterey Tax Roll and Authorize a Fee Collection and Indemnification Agreement with Monterey One Water and/or the County of Monterey for this Purpose (Not a Project Under CEQA per Article 20, Section 15378 and Under General Rule Article 5, Section 15061)
RECOMMENDATION:
That the City Council introduce by title only an ordinance to amend Monterey City Code Chapter 30, Article 4, Sewer Service Fee, to authorize the collection on the County of Monterey Tax Roll.
The ordinance also authorizes the City Manager to enter into a Collection and Indemnity Agreement with Monterey One Water and/or the County of Monterey for this purpose.
VALUE DRIVERS:
In collaboration with our community partners, work to improve the quality of life of all of our community members by fostering diversity, equity, and inclusion; championing equitable access to affordable housing; and maintaining a safe environment.
Foster a local government that is transparent and collaborative; and solicits, welcomes and appreciates input from all.
POLICY IMPLICATIONS:
The City may impose sewer service charges on an annual basis by collecting the charge on the tax roll pursuant to Health & Safety Code section 5473 et seq. The City of Monterey would move its fees for wastewater collection to the County of Monterey’s Property Tax Bill to coincide with the fees collected by Monterey One Water.
CAMPAIGN DISCLOSURE REQUIREMENT (LEVINE ACT) APPLIES: No.
FISCAL IMPLICATIONS:
Currently, the City contracts with M1W to bill, collect, and provide customer service for the sewer billing. M1W has informed the City of its intent to move all billing to the County’s tax toll and has been working with the City on the details. The City staff is in agreement to move the billing onto the County’s tax roll and also to continue to work with M1W in some capacity to continue servicing the customers. The City, at this point, does not have the capacity or expertise to bill customers directly for the City’s sewer service fee.
Date: 4/24/2024
Item No.: 1.
Council Special Meeting, 4/24/2024, Item No. 1., Item Page 1, Packet Page 4 №10/24
ENVIRONMENTAL DETERMINATION:
The City of Monterey determined that the proposed action is not a project as defined by the California Environmental Quality Act (CEQA)(CCR, Title 14, Chapter 3 (“CEQA Guidelines), Article 20, Section 15378). In addition, CEQA Guidelines Section 15061 includes the general rule that CEQA applies only to activities which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. Because the proposed action and this matter have no potential to cause any effect on the environment, or because it falls within a category of activities excluded as projects pursuant to CEQA Guidelines section 15378, this matter is not a project. Because the matter does not cause a direct or any reasonably foreseeable indirect physical change on or in the environment, this matter is not a project. Any subsequent discretionary projects resulting from this action will be assessed for CEQA applicability.
ALTERNATIVES CONSIDERED:
The City Council could choose to bill for and collect the charges itself or use a third-party provider, but that is not recommended.
DISCUSSION:
Wastewater (Sewer) Services in Monterey
Wastewater services, also known as sewer services, are provided by two agencies: the City of Monterey and Monterey One Water (M1W). The City of Monterey owns, operates, and maintains the sanitary sewer collection system infrastructure throughout the City of Monterey.
Untreated wastewater collected by the City’s sewer collection system is discharged to the M1W regional collection system and delivered to the M1W Regional Wastewater Treatment Facility in Marina. The City’s sewer rates are necessary to fund the operation, maintenance, repair, and renewal of the City’s sewer collection system infrastructure, while M1W’s rates are necessary to fund the operation and maintenance of M1W’s regional collection, treatment, and disposal facilities and including the treatment and disposal of wastewater itself.
M1W’s Shift to Property Tax Billing
Currently, Monterey One Water bills customers in Salinas and the Monterey Peninsula on alternating months, so Monterey customers receive a sewer bill every other month, or six (6) times annually. The M1W service charge is a fixed rate based on property type.
At its City Council Meeting on June 20, 2023, Council received a presentation from M1W General Manager Paul Sciuto regarding its intent to change their billing to an annual fee to be included on a parcel’s property tax bill. On October 30, 2023, the Monterey One Water Board of Directors voted to change the billing process from bi-monthly direct billing to property tax billing within the M1W Service Area, which includes the City of Monterey. M1W’s protest hearing on this proposed change in collection practices will take place on June 24, 2024 at 6:00 p.m.
On April 2, 2024, the City Council voted to send a letter of intent to move to the tax roll as well.
This ordinance, if adopted by a 2/3 vote of the City Council, will start the process to effectuate this change.
Council Special Meeting, 4/24/2024, Item No. 1., Item Page 2, Packet Page 5 №10/24
Wastewater service protects human and environmental health and is therefore a required service attached to the property. Unlike other utilities, like water or power, wastewater service cannot be turned off, even if a property is vacant. This mandatory service is billed by parcel type, not usage, and therefore the bi-monthly rate can be multiplied by six to create an annual rate.
City of Monterey Shift to Property Tax Billing: No Impacts to Potential Sewer Rate Increases With M1W moving its wastewater service fee to the property tax bill on July 1, 2024, it would be efficient and effective for the City of Monterey to do the same. City staff have been working with M1W staff through the required approvals for City fees to be included on the property tax bill.
Staff from M1W, in multiple meetings with City staff over the past several months, have also suggested that the City include any potential sewer fee rate increases in parallel with the shift to property tax-based fee collection. This would allow the City to shift to the new collection process while achieving greater cost recovery from the sewer rate increase sooner rather than wait another year for a rate increase.
For these reasons, City staff recommends moving the City’s fees for sewer collection to the County of Monterey Property Tax Bill, and authorize a Fee Collection and Indemnification Agreement with Monterey One Water and/or the County of Monterey. Should the proposed ordinance be adopted, the City will prepare a written annual report containing a description of each parcel of real property receiving such services and facilities and the amount of the charge for each parcel for the year, computed in conformity with the charges prescribed by the fee resolution. The public will have an opportunity to protest the suggested move to the property tax rolls at a public hearing.
NR/nr
Attachments: 1. Letter of Intent
2. Draft Ordinance
Writings distributed for discussion or consideration on this matter within 72 hours prior to the meeting, pursuant to Government Code § 54957.5, will be made available at the following link:
https://monterey.org/Submitted-Comments
Council Special Meeting, 4/24/2024, Item No. 1., Item Page 3, Packet Page 6 April 12, 2024
Fred Marsh
Chief Financial Officer
Monterey One Water
5 Harris Court
Monterey, CA 93940
Subject: Transition of Wastewater (Sewer) Fee Collection to Monterey County Property Tax Bill Dear Mr. Marsh,
The City of Monterey intends to move the City’s wastewater (sewer) fee for the collection to the Monterey County Property Tax Bill. This change is in conjunction with Monterey One Water moving its wastewater service fee to the property tax bill, effective July 1, 2024.
The City manages and maintains the wastewater collection systems for the residents and businesses in Monterey. The City understands there is an annual process to place the fee for its wastewater collection service on the property tax bill and will work with Monterey One Water staff through the required approvals for its fee.
We look forward to working with your staff to formalize this process and implement the change.
Sincerely,
Hans Uslar
City Manager
Cc: Mike McCullough, Director of External Affairs, Monterey One Water Nat Rojanasathira, Assistant City Manager, City of Monterey Andrea Renny, Public Works Director, City of Monterey
Andrew Easterling, Deputy Public Works Director, City of Monterey ATTACHMENT 1
Council Special Meeting, 4/24/2024, Item No. 1., Item Page 4, Packet Page 7 ORDINANCE NO. ____ C.S.
AN ORDINANCE OF THE COUNCIL OF THE CITY OF MONTEREY
№08/22
AMENDING CHAPTER 30, ARTICLE 4, SEWER SERVICE FEE, TO AUTHORIZE
COLLECTION ON THE MONTEREY COUNTY TAX ROLL
THE COUNCIL OF THE CITY OF MONTEREY DOES ORDAIN, as follows:
SECTION 1:
WHEREAS, at a public hearing held on August 2, 2011, the City of Monterey (“City”) established sewer rates with the adoption of Resolution 11-113 in compliance with the majority protest procedures and substantive requirements set forth in Proposition 218. The rates were effective October 1, 2011;
WHEREAS, sewer services are provided by two agencies: the City and Monterey One Water (M1W). The City owns, operates, and maintains the sanitary sewer collection system infrastructure throughout the City. Untreated wastewater is collected throughout the City and discharged to the M1W regional collection system for delivery to the M1W regional treatment and disposal facility in Marina. The City’s sewer rates are necessary to fund the operation, maintenance, repair, and renewal of the City’s sanitary sewer collection infrastructure, while M1W’s rates are necessary to fund the operation and maintenance of the M1W regional collection system and treatment and disposal facility, and for the treatment and disposal of wastewater itself;
WHEREAS, M1W collects sewer services charges from customers in the City for the City by billing customers on alternating months, so City customers receive a sewer bill every other month, or six (6) times annually;
WHEREAS, on October 30, 2023, M1W approved placing its annual fee for wastewater service on a parcel’s annual property tax bill. Absent a majority protest to placing the sewer service charge on the property tax roll under Health & Safety Code section 5473.1, starting on July 1, 2024, M1W customers will no longer receive a bill for sewer services from M1W, instead, it will be included on the property tax bill issued by the County of Monterey; WHEREAS, given M1W’s anticipated transition to collecting via the property tax bill, the City similarly wishes to collect sewer service charges via the property tax bill; WHEREAS, on April 2, 2024, the City Council authorized initiation of the Proposition 218 procedural process to implement a sewer fee increase consistent with the fee study. A majority protest public hearing is set for June 4, 2024;
WHEREAS, Health & Safety Code section 5473 authorizes the adoption of an ordinance or resolution approved by a two-thirds vote of the members of the City Council to elect to have the sewer charge on the tax roll;
WHEREAS, the City of Monterey determined that the adoption of this ordinance is not a Council Special Meeting, 4/24/2024, Item No. 1., Item Page 5, Packet Page 8 2 project as defined by the California Environmental Quality Act (CEQA) (CCR, Title 14, Chapter 3 (“CEQA Guidelines”), Article 20, Section 15378). In addition, CEQA Guidelines section 15061 includes the general rule that CEQA applies only to activities which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. The adoption of this ordinance is an organizational and administrative activity of the City, does not have the potential to result in either a direct or reasonably foreseeably indirect physical change in the environment, and is therefore not a project of purposes of CEQA pursuant to CEQA Guidelines sections 15061(b)(3); 15378(b)(5).
Because the matter does not cause a direct or any reasonably foreseeable indirect physical change on or in the environment, this matter is not a project. In the event adoption of this ordinance does constitute a project, it is categorically exempt under the Class 20 (Changes in the Organization of Local Governments) categorical exemption (State CEQA Guidelines section 15320). Further, none of the exceptions to exemptions found in State CEQA Guidelines section 15300.2 apply.
NOW THEREFORE, the Monterey City Council declares as follows:
SECTION 2: The above recitals are true and correct and are hereby incorporated and adopted as findings of the City Council as if fully set forth herein.
SECTION 3: The title of Monterey City Code, Chapter 30, Article 4, Sewer Service Fee, is hereby renamed Sewer Service Charge and Connection Fee.
SECTION 4: Monterey City Code, Chapter 30, Article 4, Section 30-12, Sewer User fee, is hereby renamed Sewer Service Charge, and is amended to read as follows:
“An annual sewer service charge is levied upon each parcel of real property in the City of Monterey for services and facilities furnished by the City. The rates used to determine the charge each year shall be the maximum amounts established by the City Council, by resolution.”
SECTION 5: Monterey City Code, Chapter 30, Article 4, Section 30-13, User defined, is hereby amended to read as follows:
“User” means the legal owner or the premises served as provided in this Chapter.
SECTION 6: Monterey City Code, Chapter 30, Article 4, Section 30-16, Collection of fees is hereby renamed Collection of Charges and is amended to read as follows:
“A. Collection of Charges Based on Direct Billing
1. The Finance Director, or designee, shall prepare a detailed statement showing the applicable monthly sewer service charge every other month or on such other regular basis as established by the Finance Director.
2. The Finance Director, or designee, shall prepare an invoice showing the total charge and mail it to the owner of the premises identified on the last equalized assessment roll of the County of Monterey at the address shown on such assessment roll. Failure to mail any such bill or invoice, or failure of any owner to receive any such bill or invoice, shall not excuse the owner of any premises Council Special Meeting, 4/24/2024, Item No. 1., Item Page 6, Packet Page 9 from the obligation of paying any sewer service and use charge for any premises owned by them.
3. The sewer service charge shall be due and payable within 30 days of the date the bill or invoice is mailed. A sewer charge shall be delinquent if not paid within 30 days after mailing the invoice. Any delinquency will incur a 10% penalty charge on the delinquent amount.
B. Collection of Charges with General Taxes. As an alternative procedure to Section 30-16(A), the sewer service charge may be collected for each fiscal year on the tax roll in the same manner, by the same persons, and at the same time as, together with and not separately from, the general taxes of the city. For any fiscal year that the sewer service charge is not collected on the tax roll, the city may collect all or a portion of the sewer service charge for such year on the tax roll in the following fiscal year or years.
D. The City may enforce the payment of sewer rates and penalties levied in any manner authorized by law and by placing a lien on the parcel served.
SECTION 7: Monterey City Code, Chapter 30, Article 4, Section 30-17, Agency Authorized to Collect Fees, is hereby renamed Agencies Authorized to Collect Charges , and is amended to read as follows:
“The County of Monterey and/or Monterey One Water are hereby authorized to collect the charges and fees assessed by this Article. The City Manager, or designee, is authorized to execute a Collection and Indemnity Agreement with the County of Monterey and/or Monterey One Water to collect said fees and to pay the County of Monterey and/or Monterey One Water its cost of collection. If the charges and fees assessed by this Article are not collected on the tax roll, the City may contract with a third-party agent to invoice and collect payment on behalf of the City pursuant to Section 30-16(A).
SECTION 8: Monterey City Code, Chapter 30, Article 4, Section 30-18 Sewer Connection Fees, is hereby amended to read as follows:
“Sewer connection fees shall be established by resolution. The criterion for the connection fee is as stated in Monterey One Water Ordinance No. 2021-02 or any future subsequent revisions thereto for capacity charges, except the EDU is as determined in Section 30-14.”
SECTION 9: Monterey City Code, Chapter 30 is hereby amended by replacing all instances of “Monterey Regional Water Pollution Control Agency,“ “Agency,” and “MRWPCA” with “Monterey One Water”.
SECTION 10: If any section, subsection, phrase, or clause of this ordinance is for any reason held to be unconstitutional or invalid, such decision shall not affect the validity of the remaining portions of this Ordinance.
SECTION 11. All ordinances and parts of ordinances in conflict herewith are hereby repealed.
SECTION 12: This ordinance shall be in full force and effect thirty (30) days from and Council Special Meeting, 4/24/2024, Item No. 1., Item Page 7, Packet Page 10 4 after its final passage and adoption.
PASSED AND ADOPTED BY THE COUNCIL OF THE CITY OF MONTEREY this _____ day of _______, 202_, by the following vote:
AYES: COUNCILMEMBERS:
NOES: COUNCILMEMBERS:
ABSENT: COUNCILMEMBERS:
ABSTAIN: COUNCILMEMBERS:
APPROVED:
ATTEST:
Mayor of said City
City Clerk thereof
Council Special Meeting, 4/24/2024, Item No. 1., Item Page 8, Packet Page 11 Council
Agenda Report
№08/22
FROM: Rafaela T. King, CPA, Finance Director
Kyle Olsen, Finance Analyst
SUBJECT: Fiscal Year 2024-25 Budget Primer Study Session (Not a Project under CEQA Article 20, Section 15378 and under General Rule Article 5, Section 15061) RECOMMENDATION:
That the City Council receive a primer on the Fiscal Year (FY) 2024-25 Budget VALUE DRIVERS:
Serve as stewards of the City’s financial resources through sound economic vitality efforts, streamlining operations, reasonable revenue enhancements, visionary long-term planning, fiscal transparency, and community partnerships.
POLICY IMPLICATIONS:
This request is consistent with City Charter Section 6.3 Budget: “Based on the recommendation of the City Manager, the City Council shall adopt a budget estimating the revenues and expenditures for the City for the period covered.” This is a first look at the overall projected financial position for FY 2024-25 for Council consideration and feedback.
CAMPAIGN DISCLOSURE REQUIREMENT (LEVINE ACT) APPLIES: No.
FISCAL IMPLICATIONS:
There is no cost to present this update. The purpose of this update is to inform City Council on the current projections for the FY 2024-25 budget, receive input and additional direction. In summary, City Staff are projecting spending within the General Fund as follows:
Revenues: $105,797,247
Expenditures: $107,682,233
Increases in expenditures includes an estimated wage adjustment throughout the City, as well as anticipated adjustments from arbitration. Additionally, the projected expenditures include an addition of 13 positions to the City’s Position Control List. The shortfall has been addressed with one-time savings from FY 2023-24 as well as a projected 5% savings in salaries for the FY 2024-25.
The revenues and expenses for the Enterprise funds, selected Special Revenue funds, and Internal Service Funds are shown in the discussion section of this report.
Date: 4/24/2024
Item No.: 2.
Council Special Meeting, 4/24/2024, Item No. 2., Item Page 1, Packet Page 12 ENVIRONMENTAL DETERMINATION:
The City of Monterey determined that the proposed action is not a project as defined by the California Environmental Quality Act (CEQA)(CCR, Title 14, Chapter 3 (“CEQA Guidelines”), Article 20, Section 15378). In addition, CEQA Guidelines Section 15061 includes the general rule that CEQA applies only to activities which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. Because the proposed action and this matter have no potential to cause any effect on the environment, or because it falls within a category of activities excluded as projects pursuant to CEQA Guidelines section 15378, this matter is not a project. Because the matter does not cause a direct or any reasonably foreseeable indirect physical change on or in the environment, this matter is not a project. Any subsequent discretionary projects resulting from this action will be assessed for CEQA applicability.
ALTERNATIVES CONSIDERED:
The City Council could elect not to receive a budget primer; however, this is not recommended.
DISCUSSION:
In February 2024, City Staff started the process of preparing the annual budget for FY 2024-25.
As part of this process, Department Heads were asked to estimate revenue and expenditures from their departmental program. For the FY 2024-25 budget cycle, City Staff set the FY 2023- 24 Council Adopted budget as the base and departments submitted budget requests to adjust budget levels for the needs of the new fiscal year. Staff requested that departments review prior year actuals, current year-to-date spending, and known upcoming changes to estimate future needs.
Community Engagement
The City held three Public Engagement Listening sessions promoted on social media, e-mail blasts, and the City’s public engagement portal, Have Your Say Monterey. The sessions were held on February 26, 2024, in New Monterey at Scholze Park Center, February 29, 2024, at the Monterey Public Library, and on March 2, 2024, at Casanova Oak Knoll Park Center. A total of 27 citizens attended the three sessions. City Staff provided an overview of the budget process, educated the citizens on different types of funding and allowable uses, provided a hands-on exercise to gather public feedback, and provided members of the public to ask questions about the City’s budget process and provide additional input.
Additionally, the City put out a survey on Have Your Say Monterey. The survey was open for a month and was promoted on the City’s website, virtual communications, and on flyers at the Library and Sports Center. The City received a total of 588 responses. Demographics of respondents are as follows: Seventy percent (70%) of respondents are residents of Monterey.
Forty-five percent (45.3%) of respondents were 55 or older. Sixty-one percent (61.3%) of respondents had income levels lower than $200,000. Sixty-three percent (63.5%) of respondents were female.
Suggestions from attendees were wide-ranging and included suggestions such as building a cable railway funicular to Skyline Forest and restoring library hours to serve the community seven days per week.
Council Special Meeting, 4/24/2024, Item No. 2., Item Page 2, Packet Page 13 During the budgeting process, the City attempted to incorporate survey and listening session feedback from citizens. One direct outcome of the feedback from citizens was the decision to increase the number of positions at the library. These increases will allow the library to open at least one additional day per week. Other suggestions were taken into consideration in various departments and programs throughout the City.
Summary of Proposed Budget
Below is a breakdown of the vision for the City’s FY 2024-25 budget, as well as the challenges facing the City of Monterey:
The FY 2024-25 budget continues the City’s trajectory following the March 5, 2024, Council Meeting in which the City Council received a budget update highlighting the City’s up-to-date revenue and expenditure projections for the current FY 2023-24 budget. Overall, the City is on track to exceed revenue projections and come in under spending projections.
For the upcoming FY 2024-25, Finance staff has a solid grasp on expected revenues and is working diligently with the City Manager’s Office and the Budget Team to balance the budget from the many Departmental requests. At present, projected revenues from the General Fund for FY 2024-25 are approximately $105.8 million and projected expenses are $107.7 million.
GENERAL FUND FY 2024-25 PROJECTED REVENUES
REVENUE TYPE
FY 2024-25
PROJECTED BUDGET
PROPERTY TAXES $15,795,810
SALES TAX $15,748,711
TRANSIENT OCCUPANCY TAXES $30,250,000
BUSINESS LICENSE $4,800,000
UTILITY USERS TAXES $4,997,218
FRANCHISE FEES $2,765,500
OTHER TAXES $528,214
LICENSES & PERMITS $2,015,320
FINES & FORFEITURES $257,000
INTERGOVERNMENTAL $2,171,650
INTEREST $1,630,947
RENTS $2,828,329
FEES & CHARGES $20,688,687
OF WHICH, FACILITY MAINTENANCE FUND $300,959
OTHER REVENUES $1,319,862
TOTAL $105,797,247
Council Special Meeting, 4/24/2024, Item No. 2., Item Page 3, Packet Page 14 GENERAL FUND FY 2024-25 PROJECTED EXPENDITURES
BY DEPARTMENT
FY 2024-25
PROJECTED
BUDGET
MAYOR/COUNCIL $278,682
CITY MANAGER $2,550,182
CITY ATTORNEY $1,408,061
HUMAN RESOURCES $1,473,949
FINANCE $4,158,692
POLICE $24,767,207
FIRE $29,664,009
PUBLIC WORKS $9,039,876
COMMUNITY DEVELOPMENT $7,715,131
PARKS AND RECREATION $17,037,612
LIBRARY $3,681,628
CONFERENCE CENTER $5,430,675
NON-DEPARTMENTAL $476,528
TOTAL $107,682,233
As staff is developing the final draft budget proposal for Council’s review, input, and approval, the City Council, staff, and community must be mindful of the reality of the City’s budgetary expenditures and revenues. As noted, the expenditures continue to outpace the revenues.
The projected revenue and expenses for the Enterprise Funds are shown in the table below.
For two of the funds, the Marina Fund and Parking Fund, the revenues strongly outpace the expenditures, making for healthy funds. In contrast, the Sewer Maintenance Fund and the Cemetery Fund’s expenses outpace the revenues. These funds continue to be monitored closely to reduce the exposure for the required subsidy from the General Fund.
FY 2024-25 ENTERPRISE FUNDS
Fund Name Revenue Expenses
SEWER LINE MAINTENANCE FUND $2,546,248 $2,975,211
MARINA FUND $3,798,241 $2,880,646
CEMETERY FUND $344,200 $601,253
PARKING FUND $11,967,978 $10,188,136
The table below shows the projected revenue and expenditures for selected Special Revenue Funds.
Council Special Meeting, 4/24/2024, Item No. 2., Item Page 4, Packet Page 15 FY 2024-25 SPECIAL REVENUE FUNDS (SELECT)*
Fund Name Revenue Expenditures
NEIGHBORHOOD IMPROVEMENT FUND $6,040,190 $324,212
GAS TAX FUND $823,859 $20,000
STREET INFRASTRUCTURE REHAB FUND $12,310,231 $0
PRESIDIO OF MTRY PUBLIC WORKS $30,057,760 $28,382,413
TIDELANDS TRUST FUND $3,947,736 $2,850,402
* Capital Improvement Projects related Special Revenue Funds will bring appropriation amounts to council as projects are identified.
The table below shows the projected revenue and expenditures for the City’s Internal Service Funds. These funds seek to recover costs through allocating the expenses throughout the other City Funds as appropriate.
FY 2024-25 INTERNAL SERVICE FUNDS
Fund Name Revenue Expenditures
EQUIPMENT REPLACEMENT FUND $3,637,155 $1,510,287
VEHICLE MAINTENANCE FUND $3,373,347 $3,265,448
INFORMATION SERVICES FUND $4,886,740 $5,165,783
WORKER'S COMP INSURANCE TRUST $4,193,421 $4,106,327
LIABILITY & PROPERTY INSURANCE $4,716,862 $4,716,862
EMPLOYEE BENEFIT FUND $11,190,810 $11,190,810
City Staff continue to review and finalize the needs of the City. As projections are finalized, amounts may change.
Vision for the FY 2024-25 Budget: Continue to Maintain Strong Reserve Levels Since the COVID-19 pandemic, the City has continued to make investments in its reserves to create a stronger financial footing during uncertain times. Consistent with the City Council’s strategic priority and focus on fiscal health, the FY 2023-24 Budget codified a comprehensive set of Reserve Policies that outlined a strategy for building and using the reserved funds. Since FY 2021-22, the City has seen an increase in City Reserves of approximately $19M. These policies clearly show how the City is addressing the various issues that have, for a long time in the City’s history, been placed on the back burner for lack of funding.
The FY 2024-25 budget continues to provide allocations to the City’s reserves – this includes a significant contribution to the City’s Economic Uncertainty Fund to maintain the reserve at 20% of the General Funds projected expenditures. Also, the FY 2024-25 budget makes contributions to the City’s Sports Center Reserve, Conference Center Reserve, Pension Reserve, Library Building Reserve, and Safety Building Reserve. Additionally, the FY 2024-25 budget makes contributions to two reserve funds outside the General Fund: Sea Level Rise Reserve (Tidelands Fund) and the Parking Facilities Reserve (Parking Fund). The amounts listed below are consistent with the City’s Reserve Policies and are subject to change per deliberation of City Staff or at the direction of Council.
Council Special Meeting, 4/24/2024, Item No. 2., Item Page 5, Packet Page 16 FY 2024-25 RESERVE FUND ADDITIONS
JULY 1, 2024
BALANCE ADDITIONS
JUNE 30, 2025
PROJECTED
BALANCE
Economic Uncertainty
Reserve $20,276,870 $1,259,870 $21,536,740
Conference Center
Facilities Reserve $2,588,739 $750,000 $3,338,739
Sport Center Facilities
Reserve $2,625,140 $500,000 $3,125,140
Pension Reserve $6,000,000 $1,000,000 $7,000,000
Technology $1,910,000 $1,090,000 $3,000,000
City Facilities $550,000 $250,000 $800,000
Safety Building
Reserve $250,000 $250,000 $500,000
Library Building
Reserve $250,000 $250,000 $500,000
RESERVE FUND ADDITIONS - SPECIAL REVENUE FUND
JULY 1, 2024
BALANCE ADDITIONS
JUNE 30, 2025
PROJECTED
BALANCE
Parking Facilities
Reserve (Parking
Fund) $250,000 $250,000 $500,000
Sea Level Rise
(Tidelands Fund) $500,000 $250,000 $750,000
Closely Tracking and Limiting Expenditures
Over the past several years, the City has taken steps to track and regulate City spending. After the adoption of the FY 2023-24 budget, the Finance Department initiated the process of sending out monthly spending reports to all departments. In these monthly reports, the Finance Department will identify accounts that are trending to be over budget. This regular process has provided opportunities for the Finance Department to work with departments and identify potentially problematic accounts sooner and more frequently. Additionally, the Finance Department has continued to emphasize that Department Heads have the authority to initiate a net-zero transfer from one account to another in case one account is overburdened. This has led to more accurate account levels throughout the City.
Overall, the City has benefitted from one time savings in the budget. FY 2022-23 provided the City with savings and savings are projected again in FY 2023-24; however, the City cannot depend on one-time savings indefinitely and a balanced budget is essential.
Council Special Meeting, 4/24/2024, Item No. 2., Item Page 6, Packet Page 17 Factors contributing to one-time savings the past two years include (1) Salary Savings due to vacancies, (2) underspending in Operations, (3) maintaining C.O.R.E. (Change the way we do business to be more streamlined, Operational reductions or services provided by someone else, where appropriate, Revenue enhancements through economic development, fees, taxes, cost recoveries, and Employee contracts that attract and retain talent and are financially sustainable.), (4) increase in revenues and (5) unspent encumbered funds. The Finance team along with the City Manager’s Office are working diligently to streamline and improve processes in these factors in order to be able to provide funding in deferred maintenance and other city programs and projects.
As mentioned above, the City has benefited from underspending in Operations; while these savings will support the City’s overarching fiscal goals, the FY 2024-25 budget makes strides to right size Operational Accounts and shift resources from accounts which have been over budgeted the past few years and reallocated the budget to accounts which are in more need.
To do this, the Budget Team focused on the requests of the departments while evaluating over budgeted accounts. As a result of the Budget Team’s focus, the City’s Operations & Maintenance Budget is projected to increase only 4%. The Budget Team focused on identifying underused accounts and shifting funds from these accounts to other accounts with greater needs. In total, the Budget Team identified approximately $2 million that could be redirected within the City’s General Fund.
Make Critical Investments in City Operations and Infrastructure The FY 2023-24 Budget must take critical steps to improve the City’s infrastructure. Of note:
Infrastructure Improvements: The City continues to invest in its infrastructure and facilities. The FY 2024-25 budget provides funding to Parks and Recreation to replace outdated equipment such as tables, chairs, exercise equipment, and modern facilities for part-time staff at the City’s Recreation Park Centers, including the Monterey Sports Center. Also, the FY 2024-25 Budget provides funding to improve the Library HVAC systems, Veterans Park Showers, and much-needed improvements to the Hilltop Center clay room and flooring.
Measure S & P: Measure P & S continues provide a dedicated revenue source to tackle the Sidewalks, Streets, Pavements and ADA improvements. Of note, this Measure sunsets in March of 2027. We continue to keep this in focus to renew to continue the progress and upkeep of these major structures without tasking the General Fund. Capital Improvements: The City continues to plan and work on the various capital improvements throughout the city. The details of the projects will be presented during a separate meeting.
Financial Challenges Facing the City of Monterey:
Economic Uncertainty
Throughout and since the COVID-19 pandemic, the City has faced unprecedented economic instability. Though economic conditions have somewhat stabilized over the past several years, the City continues to face uncertainty that is unlikely to subside in the near future. Of note:
Council Special Meeting, 4/24/2024, Item No. 2., Item Page 7, Packet Page 18 Inflation and Rising Costs: Inflation continues to put additional needs and pressure on our operational accounts. Like our businesses and residents, the City also sees increased costs in purchasing the supplies necessary to operate and maintain our infrastructure. In many instances, costs have risen more than twofold. These additional costs for supplies and services have increased expenditures across City departments. Growth in the Hospitality Sector: The City of Monterey has rebounded nicely from the COVID-19 Pandemic and while much of the revenue that was lost during the 2020 recession has been restored, growth in the hospitality sector is expected to only increase marginally over the next several years as international travel increases and American and International travelers look abroad for their travel. Monterey continues to be a major destination; however, the City cannot expect the major increases it has enjoyed over the past several years.
Labor and Cost of Living Adjustments
Employee expenses consistently represent the City’s largest portion of the budget, roughly 70%, and rightfully so, because City government is in the business of providing services to the community.
The FY 24-25 budget proposes the addition of 13 new positions in key areas to enhance the efficiency of operations.
One of the City’s strategic priorities is to “provide fair, competitive, and market-rate compensation to employees through effective labor negotiations.” The current labor contracts expire on June 30, 2024, and as such, the City has begun negotiations with six (6) of the seven (7) bargaining units. The seventh unit is in the final stage of closing arbitration. Given the rising costs of housing, fuel, and other goods, City employees have expressed their expectations for cost of living adjustments as well as salary adjustments for positions under market.
While the City is negotiating the various salary adjustments, we must also be mindful that we “serve as stewards of the City’s financial resources…” We are charged with not only being fair to our communities, but also to our employees. In doing so, remembering that the City has limited resources that do not allow us to fulfill every request, staff is working diligently to ensure adjustments are fair and more importantly, also be sustainable in the long run.
Recommendation
Staff recommends that the City Council receive this report and provide input. City Staff is looking forward to a robust discussion about the City’s plans for the FY 2024-25 budget.
RTK/ko
Writings distributed for discussion or consideration on this matter within 72 hours prior to the meeting, pursuant to Government Code § 54957.5, will be made available at the following link:
https://monterey.org/Submitted-Comments
Council Special Meeting, 4/24/2024, Item No. 2., Item Page 8, Packet Page 19